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New Channel 8

Online payday loans

Pay day loans, or installment loans as they are also called, are short term loans for a low dollar amount. Most pay day loans can be applied for at online loans websites. The reason that these unsecured loans are referred to as pay day loans is that the term of the loan typically lasts for the remaining time period before the next pay check of the borrower. However, if you cannot repay your payday loans at that time, you can roll them over until your next paycheck.

Lenders who offer consumers pay day loans usually have flexible repayment rates. The initial cash loans last for one pay period. However, not everyone who takes out pay day loans pays them back entirely as of their next pay check. As a borrower, you can decide whether to pay back the whole of the balance at once. If that does not work for you, you can pay back some portion until the initial loan amount and interest has been entirely paid back.

The payback process works like this. After the initial payout of your pay day loans, you have a grace period until your next payday. Once your paycheck has been deposited, the lender will electronically withdraw from your bank account a previously agreed upon amount. The amount of this payment may be for a small portion of the original pay day loans, or for the whole amount. If you are only paying back some of the loan, the rest of the pay day loans will roll over until the following pay day.

Installment loans are meant to be a short term fix for people who run out of cash prior to payday and have no other means of making ends meet. Pay day loans are not at all meant to solve long term financial difficulties. Bouncing checks written to lenders that provide pay day loans will result in a report on the delinquent borrower being filed with ChexSystems. This kind of report can make it just about impossible to open a new checking or savings account at any reputable financial institution. Thus, if you take out pay day loans, you must be certain that you can pay them off in the proper time period. You must be 100 percent certain when you take out pay day loans that you will be able to pay the loan back on schedule.

Each state sets its own regulations regarding payday loans interest rates and maximum borrowing amounts. For example, the maximum amount permitted by the State of Illinois for installment loans is the lesser of $1,000.00 or 25 percent of the monthly gross income of the borrower. In order to prevent usury, which means a loan that is unethical, usually because the borrower cannot possibly pay it back, the annual percentage rate that any lender, including lenders of pay day loans, can charge, is limited by some jurisdictions. Though most companies offering pay day loans are fair and above board, a couple of bad apples have participated in unethical activities like charging too much interest or threatening delinquent borrowers with fraud. Not only are these practices relating to pay day loans illegal, they have been denounced by the CFSA, the trade association for the industry.

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